GKN: Government urged to intervene in Melrose's £7.4 billion bid amid 'asset stripping' claims

Parliament's business committee grilled bosses from both companies today, amid heightening tensions over the mooted deal.

During the hearing Steve Turner, from union Unite, added his voice to calls from 16 MPs who earlier sent a letter to business secretary Greg Clark urging him to block the takeover.

He said: "Melrose's track record is exactly that three to five-year 'transformation', they would call it, asset stripping we'd more rightly define it as.

"They take over businesses, they break businesses up, they compartmentalise them and then flog them off to the highest bidder in order to maximise shareholder value. That's the nature of the business."

Mr Turner added: "It's about maximising shareholder value and trousering lots of money. That's the reality."

He said that Mr Clark, who has the power to block the takeover, should "absolutely intervene" on national security grounds.

Melrose bosses confirmed to MPs the firm had held meetings with the Government and the Ministry of Defence, as well as US defence officials in Washington, to reassure them over its plans for GKN, which has a site at Hadley in Telford.

When asked if they would sell GKN assets to an overseas buyer, Melrose co-founder and chief executive Simon Peckham said they would not sell GKN's military protected assets to anyone "who's not an appropriate buyer".

The Business Department said that Mr Clark is "monitoring" the situation.

GKN, which employs around 58,200 staff, has become a target after profit warnings in October and November revealed problems at its US aerospace division and sent shares tumbling.

Mr Peckham insisted the deal would be "safer for everyone in the long term, including the UK economy".

He said: "We're not a charity, we're a business, but we try to do the right thing."

On concerns over GKN's pension deficit, David Roper, another co-founder and vice-chairman of Melrose, said the group had an "exemplary track record".

"Every single pension scheme in our ownership has been left in a much more stable financial position than before," he added.

But the committee called for more assurances to be made on pensions, as well as legally enforceable post-takeover assurances on the future of the business.

The Pensions Regulator (TPR) has previously said the levels of debt involved in the deal raised concerns about whether Melrose would be able to service GKN's £700 million pension deficit.

In response to the Melrose approach, GKN has initiated Project Boost, with a proposal to separate GKN Aerospace and GKN Driveline into two listed companies set for mid-2019.

GKN chief executive Anne Stevens said the board was already looking at the financial performance of the company before Melrose made its hostile bid.

She said: "There is always opportunity to improve the financial performance of the company and the work was started in 2017."

On the potential sale of fringe operations, Ms Stevens said that of its businesses, 25 per cent are non-core and "there is a programme to find better owners for those businesses".